“In light of the recent accelerated activity in the biomass to energy market, from project proliferation to technology scale ups and consolidation throughout the supply chain, as well as recent expressions of interest by third parties in possible transactions with the company, it is now appropriate to initiate an external process to formally explore strategic alternatives,” stated Andrew Kingston.

The Company said, it does not intend to disclose developments regarding the review of strategic alternatives, other than the retention of its investment bank, Cascadia Capital, unless and until an agreement has been reached.

About Cascadia
Cascadia Capital is an independent, national investment bank located in Seattle.  Founded in 2000, Cascadia provides corporate finance and m&a services to companies in the following sectors:

Sustainable Industries, including clean technology and renewable energy,
Information Technology, including cloud storage, governance, risk and compliance and internet and new media
Middle Market, including business services, consumer products, retail, food and beverage

For more information on Cascadia, please visit www.cascadiacapital.com.

Forward Looking Information
Statements in this news release concerning the company’s business outlook or future economic performance; including the anticipation of future plant start-ups, partnerships, consortiums, teaming agreements, government assistance, other anticipated cash receipts, revenues, expenses, or other financial items; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are “forward-looking statements”. Forward-looking statements are by their nature subject to risks, uncertainties and other factors which could cause actual results to differ materially from those stored in such statements. Such risks, uncertainties and factors include, but are not limited to, changes in energy prices, availability of capital, and the company’s ability to access capital on acceptable terms or any terms at all, changes and delays in project development plans and schedules, customer and partner acceptance of new projects, changes in input pricing, competing alternative energy technologies, government policies and general economic conditions. These risks are generally outlined in the company’s 20F and other disclosure filings with the Securities and Exchange Commission.

Increased sales of BioOil® during the quarter, combined with the Company’s aggressive cost cutting measures (previously disclosed) have resulted in significant reduction in losses.

Losses for the Quarter ended September 30, 2009 were reduced to $1.1 million, or $0.004 per share, compared with net loss of $2.8 million or $0.01 per share in the third quarter of 2008. Dynamotive’s net loss for the nine months ended September 30, 2009 was $4.3 million, or $0.02 per share, compared with a net loss of $7.1 million, or $0.03 per share for the nine months ended September 30, 2008.

Excluding stock-based compensation, the net loss for the third quarter ended September 30, 2009 was $0.9 million, compared with a net loss of $2.4 million for the same quarter in 2008. Dynamotive’s net loss for the nine months ended September 30, 2009 was $3.5 million, compared with a net loss of $5.4 million for the same period in 2008.

Total non-cash expenses for the third quarter were $0.2 million in 2009 ($0.4 million in 2008) and for the nine months ended were $0.8 million ($1.7 million in 2008), resulting from non-cash compensation and other non-cash charges

During the 3rd Quarter, the Company continued its development activities in BioOil upgrading and advanced discussions with strategic partners in regard to joint development and marketing of its BioOil production and upgrading processes.

Independent tests continued on upgraded BioOil A and B further confirming the capacity to upgrade pyrolysis oil to synthetic hydrocarbons.

The Company continues to prioritize third party developments. Further details can be found in the Management Discussion and Analysis section of the financial statements which can be accessed through SEDAR and are also available on the Company’s website www.dynamotive.com.

The Company has funded its operations through product sales, loans by Directors and Management and equity contributions by strategic partners. The Company continues to have a working capital deficiency at quarter end which the Company is seeking to correct through asset sales and possible new equity financing in respect of which there can be no assurances given at this time. Further details can also be found in the Management’s Discussion and Analysis section of the financial statements.

At quarter end, the Company’s CFO’s contract expired. The Company’s Audit committee is working together with management in securing a replacement for Mr. Richardson. Mr. Richardson continues to act as a consultant to the Company.

The Investor Conference call is scheduled for Monday 14^th December at 10:00 AM Eastern Standard Time, following instructions: from North America – 1.800.346.7359 and from International – 1.973.528.0008 using Passcode – 621884  and via webcast at this link – http://www.visualwebcaster.com/event.asp?id=64618

Highlights during the Quarter:

• Announced in August the receipt of orders of BioOil from a US based client over a period of six months. Deliveries of BioOil have been completed to schedule and are continuing at the time of writing.

• The Company received an order extension for a further 9 shipments of BioOil from its US based client to be delivered over a period of 3 months which takes planned deliveries of BioOil from the plant to April 2010

• Filed Q2 results and the Company continued to implement its strategy to reduce costs, promote sales of product and licensing of its strategy, product R&D, asset utilization and development of strategic alliances to service market opportunities.

• CQuest Biochar test program in partnership with BlueLeaf Inc. provided a mid-season update on BlueLeaf’s commercial farming field trial utilizing Dynamotive’s CQuest Biochar begun and reported in 2008, that such findings further support the economic potential for CQuest Biochar as soil enhancer.

• Second year harvest results are expected to be available within 60 days of writing and will be published when available.

• Updated commercial targets for 2009/2010; the Company’s going forward plan builds on Dynamotive’s competitive advantage and position in the green fuels market place. Dynamotive is one of only two companies with the demonstrated capacity to build multi-hundred ton/day biomass fast pyrolysis plants and is alone in having operational commercial plants in this size range. In addition, Dynamotive has a technology that has been proven at commercial scale and it retains robust technical capabilities.

• Announced that the Company successfully applied the BioOil upgrading process to BioOils produced from a variety of feedstocks. The feedstocks from which the BioOils were produced included sugar cane bagasse, bark rich forest trimmings, softwoods and palm fronds. BioOils upgraded were of widely varying quality and in some instances had been in storage for several years. The results enhance the prospects of the BINGO process in that they demonstrate its robustness and versatility. Furthermore, they open the possibility of upgrading BioOils from a variety of biomass sources into a single uniform hydrocarbon product.

Summary financial results are presented as follows:

Unaudited Consolidated Statements Of Loss and Comprehensive Loss

(expressed in U.S. dollars)

As previously advised, the Company will continue to timely reporting quarterly results and material events as they arise. Following up on the last shareholder/investor conference call in September 2009, the Company will hold it’s next conference call via audio webcast on Monday, December 14, 2009, at 10:00 AM Eastern; following instructions: from North America – 1.800.346.7359 and from International – 1.973.528.0008 using Passcode – 621884  and via webcast at this link – http://www.visualwebcaster.com/event.asp?id=64618. In addition, the Company will provide project and other updates on the Company’s website.

® BioOil is a registered trademark of DynaMotive Energy Systems Corp.

The going-forward plan builds on Dynamotive’s competitive advantage and position in the green fuels market place. Dynamotive is one of only two companies with the demonstrated capacity to build multi-hundred ton/day biomass fast pyrolysis plants and is alone in having operational commercial plants in this size range; it has technology that has been proven at commercial scale and it retains robust technical capabilities.

Dynamotive has developed a product mix that provides multiple outlets for its plant outputs and a leading edge R&D program that has clear path to show the technology is mobile fuel chemical extraction capable.

In the mobile biofuel sector, Dynamotive has developed a proprietary research path as described above and is well positioned to service other processes. Dynamotive’s products can also be an input to emerging gasification and syngas technologies for the production of mobile fuels as has been proven in gasification tests on BioOil Plus™ conducted in Germany.

Further, Dynamotive believes its plants can be commercially viable at significant lower throughputs than competing technologies and provide flexibility in configuration, being able to produce BioOil® and ship product for further processing in other locations.

The combination of 12 years’ experience in process, technology and product development, coupled with plant operating experience and project development provide an advantage that the Company will capitalize on.

Dynamotive has substantially completed its capital investment program – more than $100 million in development, its development of 4 plants through 5 generations of technology, and has a product and project pipeline that meets market needs and an asset base that it can leverage to ensure financial viability. The Company is now positioned to increase revenue generation and be on its way to commercial viability in the near term.

The Company aims to achieve commercial viability by increasing product sales and technical services, licensing of plants which combined with continued cost cutting and restructuring of operations makes this goal achievable in the foreseeable future.

The cornerstone of Dynamotive’s commercial strategy is to focus its resources on core activities while levering strategic relationships to continue to develop its technology and product portfolio while maintaining and increasing its presence in the market place through development partnerships.

Based on the commercial plan, corporate operations will be focused on a) commercial activities: development of strategic alliances, marketing, licensing of technology, project and technical support and administration and compliance b) research and development based in Waterloo, Ontario and c) plant operation and demonstrations of the technology at West Lorne, Ontario.

Strategic Alliances

The Company is in discussions with potential partners in the energy sector; having completed its foundation work on technology and products, the Company offers today 12 years of development in process, technology, products and applications including a path to the production of mobile fuels from pyrolysis oil.

The Company has the assets, the know-how and a product mix that positions it uniquely in the bio-energy space; its plants provide flexibility in configuration and product mix as well as commercial viability at scales that are far smaller than other 2nd generation biofuel alternatives.

The Company has received co-operation of leading players in the energy sector both conventional and alternative for the analytical phase of its upgrading process as well as its product development and technology path.

It is a stated objective of management to continue in this path and to seek strategic alliances to accelerate development and market penetration.

Marketing / Licensing

Management’s focus is that of supporting development efforts by the Company’s partners, having established a project pipeline and knowledge base, the Company will prioritize third party developments.

The Company has agreements in place with Renewable Oil Corporation (ROC) in Australia and with Prius Developments SA in Switzerland. Under the marketing agreements in place and being negotiated, ROC will take the responsibility for development in Australia, New Zealand and Asean Countries.

ROC is currently developing projects in Australia and is supporting third party projects in Indonesia and Malaysia amongst others.

Prius Developments SA currently represents Dynamotive in France, Italy, Switzerland, Austria and Denmark.

Prius Developments SA is developing projects in Switzerland with a first project currently at the financing stage and is supporting project inquiries by third parties in the energy and biomass sector in its territories.

Based on the same principle of development, Dynamotive is in negotiations with parties for developments in US (Arkansas next lead project), Latin America (Argentina which currently is at financing stage) and China with the objective to have third party development structures in place in 2010 in these markets.

Management expects to complete the licensing of two new plants within 12 months; additional projects have reached financing stages in 3 different jurisdictions, and the Company is further supporting development efforts by its agents and joint venture parties in other regions. The Company has seen increased interest in its technology in the past 6 months which can be attributed to increase in oil prices and implementation of mandates in the use of renewable fuels and the Company’s success in product development as well as in increased sales.

Project Development and Technical Support

Dynamotive renewed its strategic alliance with Tecna SA. Through this agreement, the Company provides engineering and technical support to its marketing partners and licensors providing clients access to world class engineering capabilities. Tecna will act as Owner Engineer and technical advisor. This agreement allows Dynamotive to concentrate its resources on Technology and Product R&D while ensuring full technical support for its operations worldwide.

Technology

Dynamotive’s West Lorne Plant is operating consistently and at progressively higher output levels, operating consistently at 70% to 90% capacity. The product output is of consistent quality too. Shipments are being made regularly to clients. Sales are expected to progressively increase as the market and clients get further acquainted with the products.

The plant engineering is sound and is replicable. Multiple plant demonstrations have been made to energy, engineering and biomass firms in support of marketing efforts. This trend is continuing to grow with further diligence visits planned through year end.

Product

Dynamotive has developed multiple product lines, BioOil, BioOil Plus, BioOil Fuel Oil Blends and Upgraded BioOil A and B as well as Char. Each product meets specific requirements.

BioOil: Heat and Power application, Chemical base.

BioOil Plus: Gasification – Syngas.

BioOil Fuel Oil Blend: 5% and 10% blend – displacement of Fuel Oil / Bunker in existing installations.

Upgraded BioOil A and B: Mobile Fuel Applications.

Char: Briquetting, Pellets, Agricultural Application.

Dynamotive is today selling BioOil and Char in the market place; the Company sees a growing trend in demand for its base products (BioOil and Char) and has started marketing BioOil Fuel Oil blends.

Sales targets from its West Lorne plant are $ 1.5 million for the next 12 months. This is based on current contracts being extended and new contracts for bio fuel blends, and char being completed.

Research & Development

Research and development differentiates Dynamotive, our research and technical teams are experienced and are comprised of experts in the field. Our product research team has been pivotal in developing a BioOil that is stable and that can be stored and transported with confidence. Dynamotive BioOil has been stored for periods exceeding two years and successfully combusted. The capacity to store and transport BioOil is key in our commercial strategy, as it allows for flexible configuration of plants and the opportunity to ship product worldwide. Dynamotive has shipped BioOil from Canada to Europe, Asia, Australia, the US and Latin America.

Our team has further developed BioOil Plus as a means of increasing energy density and has this fuel used in thermal applications as well as an input to gasification processes. Dynamotive BioOil Plus was successfully tested for the production of syngas. This product provides the following advantage over direct gasification of biomass, higher energy density 14/1 vs. raw biomass and ease of use at the gasification line. Further, being a stable product it can be produced at remote locations, shipped and stored prior to use.

BioOil Fuel Oil Blends: Dynamotive’s research team has demonstrated 5 and 10% blends of BioOil and Fuel Oil. This product is intended to be utilized in stationary applications and rail and maritime uses. The Company aims to position the product as a blending agent undercutting palm oil, biodiesel and ethanol in this market. This product allows for partial displacement of hydrocarbon fuels without the need for dedicated combustion systems.

Mobile Fuels: Dynamotive’s research team has developed a two stage process to upgrade BioOil to mobile fuels. The process developed by Dr. Radlein is unique and has been replicated and been steadily improved over the past year. The process is described on our website under the BINGO heading. The process has significant advantages over other upgrading processes having higher end product yields from biomass than competing processes and is projected to be financially viable at significantly lower throughputs than competing technologies. Dynamotive continues its development program and has received support from leading energy firms in the analytical aspect of this product.

Char: Dynamotive has pioneered work on the development of agricultural applications for BioChar, Dynamotive’s CQuest™ BioChar is currently being used on a number of locations in the US and in Canada. Very positive results have been achieved to date with Blue Leaf Inc. (reports are available on our website) on the first year and second year crops. Further, the Company has supported and continues to support the US Department of Agriculture BioChar program, results of which are expected for first year crops at the end of 2009.

Financial / Compliance / Communications

Although the Company’s financial position in part due to the economic downturn been adversely affected, the Company has been able to continue operations through loans by Directors and Management and equity contributions by strategic partners.

The Company has taken aggressive steps to reduce non essential activities and costs, as a result of this, cost of operations have been reduced by approximately 50% on a year-to-year basis. Total cost of operations for Q4 2009 through Q3 2010 is expected to be $ 4.5 million +/- 10% including West Lorne plant operations. In the same period, the Company projects sales for West Lorne – product and technical demonstrations should reach $ 1.5 million, being a net contributor to offset Corporate expenses. Dynamotive projects that it can complete two licenses in the period further narrowing the need for outside financing. The Company today has a working capital deficit that it aims to cover through longer term loans by management and additional equity raises.

Debt management: The Company has $ 36 million in the carrying value of assets and total debt of $ 11.5 million (including provisions, contingent liabilities and loans by Directors and Management ) the Company also presented a plan for the re-allocation of assets including the potential sale of one of its plants. Through the potential sale of Guelph currently under negotiation, the Company believes it should be able to meet its creditor obligations.

Compliance / Communications

The Company is currently listed in the Nasdaq Bulletin Board and is reporting in British Columbia, the Company is up to date on all its filings and will continue its reporting duties as required by US SEC (foreign issuer) and BC SEC. The Company’s charter (available on our website) describes the duties and disclosure requirements by insiders and officers of the Company. Insider share trading reports can be accessed through SEDI: www.sedi.ca.

Communications: The Company will continue to timely reporting quarterly results and material events as they arise and proposes to have investor conference calls each quarter.  On Monday, September 21, 2009, the Company will hold its first shareholder/investor conference call at 11:00 AM Eastern; following dial-in instructions: from North America – 1.877.440.5804 and from International – 1.719.325.4765 using Passcode – 3546411. In addition, the Company will provide project and other updates on the Company’s website.

About Dynamotive

Dynamotive Energy Systems Corporation is an energy solutions provider headquartered in Vancouver, Canada, with offices in the USA and Argentina. Its carbon/greenhouse gas neutral fast pyrolysis technology uses medium temperatures and oxygen-less conditions to turn dry, waste cellulosic biomass into BioOil® for power and heat generation. BioOil® can be further converted into vehicle fuels and chemicals. Photographs of the Guelph and West Lorne plants may be seen on the company’s website.

About BioOil® Biofuel

BioOil® is an industrial fuel produced from cellulose waste material. When combusted it produces substantially less smog-precursor nitrogen oxides (‘NOx’) emissions than conventional oil as well as little or no sulfur oxide gases (‘SOx’), which are a prime cause of acid rain. BioOil® and BioOil Plus™ are price-competitive replacements for heating oils #2 and #6 that are widely used in industrial boilers and furnaces. BioOil® can be produced from a variety of residue cellulosic biomass resources and is not dependent on food-crop production.

Forward Looking Information

Statements in this news release concerning the company’s business outlook or future economic performance; including the anticipation of future plant start-ups, partnerships, consortiums, teaming agreements, government assistance, other anticipated cash receipts, revenues, expenses, or other financial items; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are “forward-looking statements”.  Forward-looking statements are by their nature subject to risks, uncertainties and other factors which could cause actual results to differ materially from those stored in such statements.  Such risks, uncertainties and factors include, but are not limited to, changes in energy prices, availability of capital, and the company’s ability to access capital on acceptable terms or any terms at all, changes and delays in project development plans and schedules, customer and partner acceptance of new projects, changes in input pricing, competing alternative energy technologies, government policies and general economic conditions.  These risks are generally outlined in the company’s 20F and other disclosure filings with the Securities and Exchange Commission.

The deliveries were part of an order for a minimum of 18 shipments of BioOil® to be delivered over a period of six months. The value of the contract over the six month period is estimated at $260,000.

The plant operated dry biomass input capacities of 100 metric tons per day (> 75% of nominal capacity) and peak feed rates of 116.8 metric tons per day (90 % of nominal capacity) for a number of days.

Dynamotive’s West Lorne plant is capable of processing up to 130 tonnes per day of biomass and is located within a wood flooring manufacturing facility in Ontario, Canada.

Other News:

Dynamotive further announced that it had filed its 2nd Quarter financials with the British Columbia Securities Commission and US SEC on August 20, 2009. The financial statements can be accessed through SEDAR and are also available on this website.

During the 2nd Quarter the Company in pursuit of the development of a sustainable and commercially viable business model continued to implement its strategy to reduce costs, promote sales of product and licensing of its technology, product R&D, asset utilization and development of strategic alliances to service market opportunities. Further details can be found in the Management Discussion and Analysis section of the financial statements.

1. Cost Reduction: The rationalization of our operations resulted in overhead reduction of close to 50 % on a year to year basis. Q2 2009 Loss $1,536,811 vs. Q2 2008 $2,908,763. Work is ongoing with further operational and structural changes planned that are expected to further reduce overheads and operational costs.

2. Product Sales: Completion of test program with US Client and gaining of order estimated at $260,000 for continued deliveries as previously announced, BioOil® shipment for test purposes to prospective clients and BioChar shipment for testing in agricultural applications. For the first six months of 2009 BioOil® shipments to clients resulted in sales of $79,326.

3. Technology Licensing: The Company continues to prioritize third party development and is limiting its own development efforts. In line with this strategy, the Company continued to support its partners and agents in Australia, Europe, US and Latin America. In the second quarter the Company hosted visits at its West Lorne and Guelph plants as well as its research facility by parties from US and Europe who conducted due diligence visits.

4. Product Research and Development: At its Waterloo research facilities, the Company continued its development work on the production of Mobile Fuels from BioOil® and BioOil® fuel oil blends. The Company shipped samples to independent parties in the energy sector with whom it is cooperating in the analytical phase of the program and has received valuable data that supports internal analysis and objectives.

5. Strategic Alliances: The Company continued to work with its engineering partners in support of licensing of its technology and in project implementation. It continues its work with parties involved in the energy and technology sectors to advance its market reach and its R&D program.

6. Asset Utilization: The Company is focusing its efforts in making its asset base productive looking closely at its utilization and potential within Dynamotive or through sale. The Company has $36,062,929 in assets. These assets are ready and capable of operating “on demand”. Market conditions have limited their utilization, but we have the opportunity to continue to enhance their operation in 2009 and in doing so unlock the Capital invested to meet our total liabilities which stood at $11,343,170 as at June 30th 2009.

Q2 2009 Report

• Annual Report 2008
• Letter to Shareholders 2009
• Notice and Information Circular 2009
• Financial Statements Request Card
• Form of Proxy – English

Dynamotive Energy Systems Corporation (OTCBB:DYMTF), a leader in biomass-to-biofuel technology, today announced that, as a result of a review by the British Columbia Securities Commission “BCSC”), we are issuing the following press release to clarify our disclosure.

The BCSC’s review is part of their ongoing Continuous Disclosure Review Program.  The review identified several matters with respect to Dynamotive’s Management Discussion and Analysis (“MD&A”) for the year ended December 31, 2007 and the subsequent quarterly periods ended March 31, 2008 and June 30, 2008 respectively, that require expanded detail and explanation.  This additional disclosure relates mainly to an expanded narrative covering the Company’s operations, business development activities and changes in accounting policies; and as to providing additional breakdown and detail for related party transactions and share capital data.  Accordingly, the Company has amended its MD&A to the satisfaction of the BCSC and has re-filed amended documents for these periods.  The Company knows of no other outstanding matters with the BCSC at this time.

For the three months ended June 30, 2008, the Company reported a net loss of $2.9 million or $0.01 per share, compared with a net loss of $3.5 million or $0.02 a share for the same period a year earlier. When stock-based compensation is excluded, Dynamotive’s Q2 2008 net loss was $2.3 million, compared with $2.8 million during 2007. (All figures are in US dollars.)

The lower loss for the quarter is due mainly to lower business development, research and development expense and an overall reduction in general and administrative expenses, partially offset by increased activity levels in the Company’s US and Argentine offices.

During the quarter, Dynamotive continued commissioning of a modular 200-tonnes-per-day intermediate grade BioOil® plant in Guelph Ontario and repaired fire damage at the upgraded 130 tpd plant in West Lorne, Ontario.

President and CEO, Andrew Kingston, said: “During the second quarter of 2008 and since quarter end, Dynamotive has completed the repair and start-up of the West Lorne plant and has made related modifications in Guelph.  Although the four month delay due to these events occasioned by the thermal incident, has slowed our project development activity, the Company is receiving renewed expressions of interest from these prospects and has an attractive pipeline of advanced opportunities.  Sales of BioOil and char to existing customers and prospects for additional product contracts in the next few months are promising.  We look forward to increased sales activity through the remainder of this year and to making advances in the US, South American and other project developments.”
Quarter Highlights

• Completed repair work and re-commissioning at West Lorne along with implementation of preventative measures at Guelph.
• Initial post-repair production from the upgraded West Lorne plant in July 2008, with $100,000 of invoiced sales of product and services since re-start-up.
• Completed additional contracts in US and Argentina to advance project developments.
• Completed additional third party tests on BioOil, BioOil Plus and BioChar.
• Advanced research and development work on a two stage process for the upgrading of BioOil, which the Company believes can be a cost effective path to using BioOil in the production of mobile fuels in conventional refineries.
• The Company is currently working with its investment bankers and has agreed terms in principle for convertible debt financing.  Subject to final agreements and market conditions, funding is targeted for September.

Q2 2008 Report

The shareholders of the company approved all of the motions proposed. The slate of Directors proposed was approved without any changes as was the reappointment of BDO Dunwoody as the firm’s auditors for the 2008 fiscal year.  The slate of directors received in excess of 98.6 percent (98.6 to 99.7 pct) favorable votes by the shareholders with no votes against.

Highlights from the address to shareholders by President and CEO, Andrew Kingston:

• Following the fire at West Lorne, which caused about $500,000 in equipment damage, the Company’s engineering team has worked diligently in establishing the root cause and the needed  remedial action to be taken .  Having established the root cause, minor modifications were made at Guelph.  These modifications were tested at the plant during a production run held last week. The reactor and equipment was then inspected to assess the validity of the modifications.  The analysis is ongoing, but management is confident that the solutions developed are sound.  Based on final assessment, both plants are expected to be ready for operations in July.  The Company has commitments for delivery of BioOil to clients in July and beyond and is confident that it will meet its obligations.
• The Company’s efforts in the past months have also focused on the development of sales of BioOil and BioChar to clients locally and internationally. The output of West Lorne is substantially committed (BioOil, BioChar and electricity) and detailed negotiations are taking place in the US and Canada for placing the output of Guelph.  Strong fuel prices and environmental mandates are being introduced and will make our proposition attractive to users.
• The Company continues its project development work and is confident that once the plants are back in operation, it will be in a position to advance with its project plans in the US, Europe and Asia.  Further, the Company is in final stages of negotiation for the fabrication of plants in Europe with a well established firm. Once completed, the Company will be in a strong position to service its project pipeline in the region. Similar arrangements are being discussed in the US and in Asia.
• The Company continues its research into BioOil upgrading and will be publishing further results in the third quarter.  Initial testing has been very promising and we believe we can create a wider market for upgraded BioOil as an input to refineries. Our Waterloo lab is working on a number of paths that could prove commercially viable.
• We continue our development and commercialization work with BioChar. We have shipped BioChar to various agricultural users and nurseries as well as supporting studies in the US and Canada.   BioChar as a soil enhancer can potentially reduce the amount of fertilizer and water use as well as enhance crop yields and be a very efficient carbon sequestration method.
• Dynamotive remains well positioned to become a leader in the non-foodstuff biofuel and by-product industry.  We have two plants that are built and ready to restart operations, a market that is looking for alternatives and is pricing the alternatives favorably.  Most importantly, a market that is looking for alternatives that do not compete with food sources and for land use.

The company looks forward to the coming year and would like to thank the shareholders for their strong show of support.

For the three months ended March 31, 2008, the company reported a loss of $1.4 million or $0.01 per share, compared with a loss of $3.2 million or $0.02 a share for the same period a year earlier. When stock-based compensation is excluded, Dynamotive’s Q1 2008 net loss was $0.8 million, compared with $2.4 million during 2007. (All figures are in US dollars.)

The lower loss for the quarter is due mainly to the recognition of $500,000 of license revenue from a contract in place since 2006, lower research and development expense and stock based compensation, partially offset by increased activity levels in the Company’s US and Argentine offices. Also included is a reversal in the quarter of certain compensation costs of $1.1 million previously accrued and expensed in fiscal 2007 and which reversal resulted from a voluntary surrender of certain compensation entitlements by senior management.

During the quarter, Dynamotive continued commissioning of a state-of-the-art, modular 200-tonnes-per-day intermediate grade BioOil® plant in Guelph Ontario and completed the upgrade in West Lorne, Ontario. This upgrade expands the West Lorne plants capacity to 130 tonnes per day.

President and CEO, Andrew Kingston, said: “During the first quarter of 2008, we made significant advances at our Guelph and West Lorne plants though we continue to deal with various start up issues as we push to higher capacity levels and longer production runs. We suffered a set back at West Lorne in early April with a small fire, but that damage is being repaired and the plant will be back on line shortly.  We have also continued to develop our US and South American projects and will continue to report substantive developments as they occur.”
Dynamotive highlights in the First Quarter of 2008

• Completion and advanced commissioning at Guelph.
• Initial production from the upgraded West Lorne plant.
• Dynamotive completes feedstock supply and other contracts in US (Missouri) and Argentina (Corrientes) in support of project developments.
• Signed a cooperation agreement in Taiwan to potentially develop BioOil plants in the Greater China area
• Advancing additional project opportunities in Europe, Australia, Southeast Asia and elsewhere.

Q1 2008 Report

The Company’s Comprehensive Loss (including foreign currency adjustment of $6.2 million), was $8.0 million for the Year 2007. Excluding the foreign currency adjustment, the company’s 2007 Net Loss was $14.2 million, or $0.08 per share, compared with a net loss of $14.3 million, or $0.09 per share, for 2006.  Excluding Stock based compensation, the Company’s Net Loss for 2007 was $10.6 million (2006 $9.9 million). (All figures are in US dollars)

For the three months ended December 31, 2007, the company reported a loss of $4.3 million or $0.02 per share, compared with a loss of $4.1 million or $0.02 a share for the same period a year earlier.  Net of Non-cash compensation, the Company had a Net Loss of $3.3 million during the forth quarter compared to $3.1 million during the fourth quarter of 2006.

As at December 31, 2007, the Company had cash and cash equivalents of $1.8 million.  This reflects the Company’s cash balance at the beginning of 2007 of $9.3 million plus equity issuance of $23.1 million less capital expenditures of $21.0 million and operating expenditures of $9.6 million (which includes changes in working capital balances and miscellaneous non-cash charges).

CEO Commentary

Andrew Kingston, president and chief executive officer, said, “During the year Dynamotive completed construction of a state-of-the-art, modular 200-ton-per-day BioOil plant in Guelph, Ontario and also expanded and upgraded the West Lorne, Ontario plant, which is currently re-starting operations.  Additionally, we strengthened Dynamotive’s management team and positioned ourselves to capitalize on world-wide market opportunities, most specifically in Canada, U.S., and Latin America.  The Company faced many challenges during 2007, as we worked to bring our biofuel facilities to operating status, as well as expand business operations in North and South America. We fully expect 2008 to be a year of achieving significant milestones.”

2007 Highlights

Financial

• Significant cash infusions from $23.1 million in equity financings and warrant exercises used to fund operations and to complete the Guelph and West Lorne plants.
• Minimal debt
• Invested $2.0 million in R&D ($4.2 million in 2006).
• Incurred $3.6 million in non-cash compensation expenses ($4.3 million in 2006).

Operational

• Launch of higher energy content biofuel – BioOil Plus
• Signed Contract with Ontario Power Authority to Supply Power to Grid
• Established First Resources Corporation to develop partnerships with First Nations
• Signed agreements with provincial government in Argentina to develop up to six biofuel plants
• BioOil production start-up at Guelph 200 tpd plant
• Signed comprehensive Letter of Agreement with Mitsubishi  Corporation
• Announced key agreements for our first commercial plant in the USA, in Willow Springs, Missouri.

Annual Report 2007